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Comments to PUCT on Wholesale Electricity Market Design

The Texas Public Utility Commission (PUCT) requested public input as part of an ongoing effort to ensure the reliability of its wholesale electricity market design following Winter Storm Uri. In particular, the PUCT requested comment on a study which assesses the performance of specific reliability mechanisms. We submitted comments on how the PUCT can achieve its reliability goals in a manner that ensures just and reasonable rates for consumers. In particular, we noted that the Electric Reliability Council of Texas (ERCOT) may not need an additional reliability mechanism if it concludes that the changes that have already been implemented to its market have been sufficient to address reliability. We cautioned that the question of whether ERCOT has a reliability problem that would justify a new mechanism is distinct from whether it has a resilience problem that would leave the grid vulnerable to extreme weather conditions. For any new mechanism it may deem necessary, we encouraged the PUCT to choose a design that accords with economic principles. Such a design would compensate both dispatchable and non-dispatchable resources according to their reliability value, include an efficient penalty structure for non-performance of generation units, reduce uncertainty for market participants, and mitigate market power exercise.